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ESG dynamics in modern digital world: empirical evidence from firm life-cycle stages

Author

Listed:
  • Dan Hou

    (Yunnan Technology and Business University)

  • ZhongJi Liu

    (Jiangsu Vocational College of Business)

  • R. M. Ammar Zahid

    (Yunnan Technology and Business University)

  • Umer Sahil Maqsood

    (Xi’an Jiaotong University)

Abstract

The study investigates how corporate digital transformation (DT) affects Environmental, Social, and Governance (ESG) performance and how this impact varies across different stages of a firm’s life cycle (FLC). We analyze data from 6039 Chinese A-share listed firms spanning the years 2010 to 2019 using panel regression with fixed effects. The initial findings underscore the significant and positive influence of DT on firms’ ESG performance, indicating companies that embrace DT tend to outperform their peers in various ESG dimensions. To bolster these findings, we employ robust sensitivity analysis techniques, including sysGMM estimation, propensity score matching, and alternative variable methodologies. Moreover, the channel analysis demonstrates that firm performance acts as a mediator in the relationship between DT and ESG. Additionally, supplementary analysis reveals that the positive impact of DT on ESG performance is most pronounced during the maturity and decline phases of the FLC. Notably, this effect is even more substantial among state-owned enterprises compared to non-state-owned counterparts. Overall, our study findings contribute to ESG dynamics in firms and provide valuable insights that can assist practitioners in formulating and executing effective ESG strategies in the digital world.

Suggested Citation

  • Dan Hou & ZhongJi Liu & R. M. Ammar Zahid & Umer Sahil Maqsood, 2025. "ESG dynamics in modern digital world: empirical evidence from firm life-cycle stages," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(6), pages 12325-12350, June.
    • Handle: RePEc:spr:endesu:v:27:y:2025:i:6:d:10.1007_s10668-023-04425-0
    DOI: 10.1007/s10668-023-04425-0
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